ExpertHard1 markMultiple Choice
CPA · Question 45 · Area II: Business Law
Which of the following is a requirement for a valid contract under common law?
Which of the following is a requirement for a valid contract under common law?
Answer options:
A.
The contract must be in writing.
B.
There must be consideration given by both parties.
C.
The contract must be fair to both parties.
D.
The contract must be notarized.
How to approach this question
Recall elements: Offer, Acceptance, Consideration, Capacity, Legality.
Full Answer
B.There must be consideration given by both parties.✓ Correct
B
A valid contract requires Offer, Acceptance, and Consideration (plus Capacity and Legality). Writing is only required for certain contracts (Statute of Frauds). Fairness is not a requirement (peppercorn theory).
Common mistakes
Thinking written contracts are always required.
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